Octagon Personal Pensions Scheme Tuesday unveiled a new digital micro-pension solution for informal sector.
Christened Mobikeza, the revolutionary product will also seek to bring on board individuals in the juakali and bodaboda sectors majority of whom have poor saving culture.
The firm’s Group Chief executive Fred Waswa said the the product which is embedded with additional features including medical covers for retirees has so far incorporated over 5,000 subscribers with a target to upscale the figures to 1million in 6 to 12 months after the full rollout.
“Our saving culture as a country is still low. In order to enjoy your retirement years, one needs a stable source of income and given that formal employment is no longer an option, it is important to sign up to a registered Benefits Scheme and make regular contributions in your employed years,” he said during the product’s launch in Nairobi.
Mobikeza has an added unique advantage of allowing a contributor to make unlimited deposits and periodic withdrawals via USSD or an app, targeting the youth, Jua Kali artisans and workers in Micro-Small and Medium-Sized Enterprises in mind and has unmatched capability of convenience in on-boarding, tracking and access of funds all through the mobile with access to three types of investment funds namely; Ustawi Fund (Conservative), Hakika Fund (Guaranteed) and Usawa Fund (Balanced).
Although Kenya’s pensions sector has enjoyed strong growth in recent years, the majority of workers are still not planning for retirement, a worrying trend.
Retirement Benefits Industry in Kenya has undergone major changes in the last few years which has led to a pension coverage of about 20 per cent of the current working population.
The informal sector employs over 53 per cent of Kenya’s working population.
This is a significant improvement in comparison to the years leading up to 1997 where the industry was generally unregulated and thus characterized by lack of protection of the interests of the members in management of scheme affairs. In the absence of a clear regulatory framework, some of the challenges that faced the Retirement Benefits Industry, which led to the enactment of the Retirement Benefits Act in 1997.
In Kenya, the Retirement Benefits Assets as a percentage of GDP stood at 13.4 per cent as of May 2019, compared to more developed markets like the USA at 84.1per cent and the UK at 105.3per cent.
Retirement Benefits Schemes allow their members to make regular contributions during their working life and once a member retires either after attaining the retirement age or earlier due to other factors, mainly ill-health, these contributions plus accrued interest are utilized to provide retirement income to the member.